Continuation of the “Grain Agreement” will not save the Ukrainian farmers from crisis. Such opinion was expressed by the Vice President of Economic Education of the Kyiv School of Economics Oleg Nivyevskyi.
On the one hand, it is good that the grain agreement continues to operate. This is an opportunity to export significant surpluses, bring foreign currency into the country, ease the pressure on local currency, free up warehouses and silos for the new harvest. For other countries, Ukrainian grain is a guarantee of product security.
On the other hand, the agreement does not eliminate the gap between domestic and export grain prices. Actually, the gap between domestic (exw) and export (fob) prices has widened dramatically. Due to 6 times more expensive logistics, lack of alternative export opportunities, etc. But domestic prices actually fell below the cost of production.
The impact of the grain corridor on domestic prices is minimal
According to Nivyevskyi, the operation of the grain corridor will not differ from the previous 4 months. Putin will continue to keep everyone on edge and undermine the credibility or sustainability of the Corridor with regular statements or even actions. Therefore, the dramatic gap between export and domestic prices will most likely remain, and it will be difficult for farmers to make ends meet. Due to export problems and low domestic prices, farmers have already lost more than $17 billion.
Nivyevskyi emphasized that this means further problems with liquidity, profitability and dubious prospects this year and next.
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